2018 (10) TMI 547 - AT - Service Tax

Refund claim - relevant date - the relevant date of refund claim for the purpose of limitation is the date of payment received in foreign exchange by the service provider or the date of export of service. ? - Held that - Larger Bench decision of CESTAT South Branch, Bengaluru in Bengaluru Service tax vs. Span Infotech Pvt. Ltd. 2018 (2) TMI 946 - CESTAT BANGALORE has held that export of service is completed only on receipt of consideration in Foreign exchange and therefore the date in Forward Inward Remittance Certificate (FIRC) is relevant in view of N/N. 27/2012 with effect from 01.03.2016 14/2016 (NT) refers - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Admissibility of refund claim based on the relevant date of refund claim for the purpose of limitation, interpretation of the date of export of service, applicability of judicial precedent, resolution of conflict by Larger Bench decision, retrospective effect of beneficial amendments to the statute, determination of the relevant date for refund claims under Rule 5 of Cenvat Credit Rules.

Analysis:

The judgment dealt with two appeals that were considered together due to the identical nature of the issue involved in both cases. The central issue revolved around the admissibility of a refund claim by the respondents, focusing on whether the relevant date for the refund claim's limitation period should be the "date of payment received in foreign exchange by the service provider" or the "date of export of service." The initial adjudicating authorities and the Commissioner (Appeals) had allowed the refund based on the prevailing judicial precedent at the time, covering claims made between April 2012 and March 2014 for four quarters.

A critical aspect of the judgment was the resolution of the conflict through a Larger Bench decision of CESTAT South Branch, Bengaluru, which clarified the interpretation of the relevant date for export of service. The Larger Bench decision in Bengaluru Service tax vs. Span Infotech Pvt. Ltd. emphasized that the export of service is considered completed only upon the receipt of consideration in foreign exchange by the service provider, making the date in the Forward Inward Remittance Certificate (FIRC) relevant. This interpretation was in line with Notification no. 27/2012, effective from 01.03.2016. The Larger Bench also highlighted that beneficial amendments to the statute could have retrospective effects, as long as they do not burden the public, citing a Supreme Court decision in the case of Bhatika Township.

Ultimately, the Tribunal upheld the Commissioner's order confirming the refund claims, as it aligned with the proposition of law established by the Larger Bench decision. The judgment emphasized that the relevant date for determining the time limit for refund claims under Rule 5 of Cenvat Credit Rules regarding export of services should be considered as the end of the quarter in which the FIRC is received, especially for quarterly refund claims.

In conclusion, the Tribunal dismissed both appeals and confirmed the orders passed by the Commissioner (Appeals) based on the interpretation of the relevant date for refund claims as established by the Larger Bench decision and the applicable statutory provisions.